Whether you trade frequently or a few times a year, each transaction has costs associated with it. Depending on your broker, these costs may be a small part or a big part of your total cost of investing.
Some brokerages provide a lot of research material to their clients. And therefore they charge higher commissions too. Other brokers do not provide such frills and pass on the cost savings to their clients. I use one such broker – Interactive Brokers.
Here are some useful things to know about them:
– They have among the lowest commissions around ($0.005 per share, minimum of $1 per trade).
– They are a direct access brokerage, which means that your orders get routed directly to the exchanges giving you almost instantaneous fills.
– It is very easy to place orders. You can place orders with just 2 clicks. This can be good or bad. You can easily end up selling when you want to buy and vice versa. I know from experience. 🙁
– On the flip side, they do not provide analyst recommendations.
– Their customer service is not considered to be the best (although I personally have always received great customer service from them).
-Â Their trading software does need a little bit of a learning curve.
– You can trade stocks, futures, options, currencies (they do charge a commission for currencies though unlike other FX brokers) and mutual funds (although I have not tried out mutual funds through them yet).
– They expect their clients to know what they are doing. Not much hand holding from their side like some other full service brokerages provide.
– They do not issue margin calls. They just liquidate your positions. And margin requirements can change based on market conditions. A friend of mine had a unpleasant liquidation in his account on a complicated options spread trade. If you trade on margin, you need to keep a eye out for such issues.
If you are interested in them, you can check them out at: http://individuals.interactivebrokers.com/en/main.php
How about others? Which broker do you use?
What do you like best about your broker?
I dont trade a whole lot. We have Fidelity as the Yahoo! sponsored broker for our ESPP, Options, etc. Hence I use Fidelity for whatever little personal buying/selling I do. No complaints.
Bank of America Brokerage gives free 30 trades every month. The condition is you need to have 25K balance in your accounts at BofA (checking+savings+CDs+..)